Berlin It was a political explosive proposal that Angela Merkel (CDU) and Emmanuel Macron unexpectedly presented on Monday. And so the Chancellor’s and the French President’s push for a € 500 billion reconstruction fund is causing ongoing controversial discussions. This applies to the European level, where states like the Netherlands and Austria opposed the plan, as well as to federal politics.
The Merkel-Macron concept contains two fundamental concessions from a German perspective: In order to fill the 500 billion fund, the EU should be allowed to go into debt. And the aid for the economies particularly hard hit by the corona pandemic should not flow in the form of loans, but as grants that do not have to be repaid.
While the European countries are now waiting for a proposal from the EU Commission on how the multi-billion dollar reconstruction fund should be designed, the considerations for further implementation have already begun in Berlin. One thing is clear: the Bundestag must approve the fund. Merkel emphasized this when the plan was presented. But what the Chancellor did not say: what majority is needed in parliament?
According to Handelsblatt information, this question is currently being discussed within the federal government. So far, no one wants to commit himself to the Federal Ministry of Finance or the Chancellery. First of all, one needs the concrete proposal of the EU Commission, only then can one finally assess it.
Basically, the initial position was that a simple majority is sufficient. However, it also means that a two-thirds majority is on the safe side. Because lawsuits against the reconstruction fund before the Federal Constitutional Court are possible, a two-thirds majority of the Bundestag could be an important signal.
Opposition supports two-thirds majority
Background of the considerations: The debt for the reconstruction fund should be paid off from the EU budget in the long term. And Germany is the largest contributor to the EU budget. If government budgets are tied up by the reconstruction fund over several legislative periods, it is a far-reaching decision, government circles admit.
For this reason, two thirds of the MPs are considered to be in favor of the opposition. “The reconstruction fund, as it has been up to now, should bring about a major change in the financial structure of Europe and thus also in the budgetary relationships between the member countries and Europe,” said FDP chief budget officer Otto Fricke. “Anyone who intervenes so significantly in the German budget over many years can never do so without a corresponding two-thirds majority.”
For Merkel and Olaf Scholz (SPD) it would be complicated by a two-thirds majority, they would then need votes from the Greens and the FDP. While the Greens generally welcome and agree to the project, there have been critical comments from the Liberals. FDP leader Christian Lindner warned against entering a “debt union”, although there is a debt ban on the EU.
After all, Merkel can rely on broad support from her parliamentary group for the reconstruction fund. This was not always the case, for example, there were many deviations from the aid packages for Greece. But this time the key people in the Union leadership signaled direct approval, including faction leader Ralph Brinkhaus and chief housekeeper Eckhardt Rehberg (both CDU). The criticism, including from representatives of the economic wing, was subdued.
The SPD calls on its coalition partner, but also the FDP, not to block the project. “The German fiscal conservatism of the CDU / CSU and the FDP must consider whether it wants to Europeanize itself or slide into a fiscal nationalism that endangers the whole project Europe,” said the SPD European politician Metin Hakverdi.
Reconstruction Fund is linked to the EU budget
The economic impact of the corona pandemic is so devastating and concerns about the state of the EU are so great that much that now would have been unthinkable seems feasible in the Union. Above all, this includes the possibility of debt for the EU.
After all, according to the Union, there is no direct communitization of debt, as would be the case with corona bonds. The reconstruction fund is linked to the EU budget and is one-off and limited in time.
Nonetheless, some in the Union group are concerned that the reconstruction fund could only be a first step, followed by others. After indebtedness, the next step could be to debate the right to levy taxes for the EU. Germany has always rejected that.
Finance Minister Scholz sees what the Union fears as a possible target. At least he sees the reconstruction fund as a step for a “deeper integration of the EU”. And this implies in the Ministry of Finance that further steps should follow.
More: Italy and Spain welcome the Franco-German relief plan to deal with the corona crisis. There is clear resistance in Austria and in other countries.